Abstract
This report seeks to address the managerial challenges that companies face in the procurement of Information Technology (IT) resources and the appropriate solutions. In many firms, strategic decisions face several challenges about the rising cost of computing services and the integration of information stored in different applications. Moreover, much-sophisticated hardware and software are used within organizations, thus increasing the investment in IT infrastructure as opposed to the core business operations. As information systems (IS) are an integral part of organizations, this paper analyses the various challenges that managers face regarding IS and the various contemporary hardware platform trends that seek to deal with the problems.
The various technological trends that address the organizational challenges include the integration of computing and telecommunication platforms, grid computing, on-demand computing, autonomic computing, and edge computing. However, on-demand computing is seen as the best alternative, as it addresses the major issues related to the cost of computing and management of IS within an organization.
Introduction
The business environment in which organizations operate today is always changing, and it is becoming more and more complex. Organizations, both private and public, feel increasing pressures that force them to respond quickly to changing conditions and to be innovative in the way that they operate (Turban et al. 3). In essence, making decisions may require considerable amounts of relevant data, information, and knowledge. Processing these, in the framework of the needed decisions, must be done quickly, frequently in real time, and usually requires some information systems or information technology support.
According to Haag, Cummings, and McCubbrey (274), companies face cost pressures in the operation of their IT infrastructure; they expend more than 50% of their IT budget. This implies that firms have to keep prices in line with the competition and the firm’s value change. Keeping costs low and services to customers are a very big priority; hence the objective of this report is to present the need for the implementation of a technology trend such as utility computing to reduce the unfavorable expenses.
In addition, any feasible Information System plan must be able to include the provisions for operating and upgrading the IT infrastructure to support the changing needs. Since many aspects of IT infrastructure involve technical issues that seem far removed from business issues, it is often difficult for executives to participate effectively in discussions about a long-term strategy for IT infrastructure. Firms also need to implement flexible infrastructure that can endure high increases in computing loads and common threats from hackers and peak loads and viruses. Because customer and worker anticipations for service are increasing, companies need to increase their service levels to meet customer demands.
Therefore, the scope of this research is to analyze and present the specific solutions to the challenges that managers face about IT infrastructure and the basic implications for organizational sustainability.
Organizational Challenges
Despite the exciting opportunities provided by information systems for both businesses and individuals, there are still new problems, issues, and challenges for managers. It is researched that most companies find it difficult to integrate computing and telecommunication platforms at an affordable cost. Furthermore, most firms do not provide technical solutions as their core business operations, but still, they are faced with a combination of managerial, organizational, and technological problems (Stair & Reynolds 36).
Previously, companies invested in IT because such strategies provided real economic value to the business. The decision to implement or sustain an information system presumes that the profits on this investment will be higher than those of other assets. These higher profits can be expressed as increases in productivity, as increases in revenues which will improve the firm’s market value, or perhaps as better long-term tactical positioning of the firm in certain markets which produce superior returns in the future. Despite all the IS’ capabilities, organizations have not been able to realize the full potential; the cost of computing services has increased dramatically, the cost of the software remains high, and the intensity of computing and communicating has increased as other costs have declined. Thus, many companies such as those dealing with manufacturing and production do not keep much emphasis on the running of IT infrastructure because it is not the core business operation.
In some instances, organizations are required to invest in IS simply because such investments are a requirement in the corporate plan. For instance, an automobile company may be forced to implement an intranet for managing the information flow between the components of the production system to make motor manufacturing information more accessible to different parts of the organization, increasing precision, and lowering costs.
Thus, according to Laudon & Laudon (28), the following are the key managerial, organizational, and technological challenges that contribute to the problem of high IT costs within organizations:
- The information systems investment challenge: Companies experience the challenge of obtaining meaningful returns on the information systems investment. One of the greatest challenges that managers face is that of ensuring that there are meaningful returns in the procurement of IT. It is one thing to use information technology to support the business processes such as formal rules that have been developed over a long period for accomplishing the task. On the other hand, it is another thing to generate revenues using it. The strategic management seems to ask themselves the following questions: How can the investment in information systems/technology be evaluated? Are there any returns that can be feasibly realized from the systems? Do competitors gain more from their investments?
- The strategic business challenge: Despite heavy IT investments, organizations are still not realizing significant business value from their systems, because the appreciation of complementary assets required to make the technology asset work is somehow lacking. There is dynamism in technological advancement as compared to the firm’s ability to handle the growing power of IT. To benefit fully from IT, gain productivity, and become competitive, many organizations need to redesign and restructure their business operations by making major changes in the organizational culture and developing or acquiring business models that support sustainable business processes
- The globalization challenge: organizations experience the challenge of understanding the business and system requirements for the global economic environment. The advancement in international trade and multinational enterprises calls for the development and design of information systems that support business operations in different nations. Previously, differences in culture, trade tariffs, and political governance resulted in conflicts among international trade parties due to the failure to centrally control business operations. To develop integrated, international, IT, organizations need to acquire and develop hardware, software, and communication standards that support global business operations and multinational enterprises.
- The information infrastructure challenge: Since the business conditions and technologies change rapidly, organizations find it difficult to develop an IT infrastructure that supports their strategic business goals. Many companies are filled with information technology that is obsolete and cannot support the rapidly changing operating environments. There are expensive and complex systems like the generic legacy systems that act as constraints to the core business operations. Dealing with new business and technology challenges may need redesigning the organization and developing or procuring a new IT infrastructure.
- Responsibility and control challenge: The decision of designing applications that can be used in an ethically and socially responsible manner seems to bring about controversial thoughts. Furthermore, the security of information is a major issue that contributes to the high costs of maintaining an IT infrastructure. The ethical and social issues brought about by information systems include threats to individual privacy and intellectual property rights, computer-related health problems, computer crimes, and the elimination of jobs. A major strategic management challenge is to build IS that users can be able to use and manage responsibly.
Solutions and Implications
The research findings indicated that a strategic solution is required to solve the problem explained in the previous section. There were several alternative solutions researched in the context of dealing with the high information technology costs. Therefore, the various hardware and software trends that could be implemented in the organizational process to address this challenge are:
The integration of computing and telecommunication platforms
A telecommunication environment provides connectivity on demand by providing communication channels for text, voice, and video images. This implies that computing operations may be performed over the internet through the integration of hardware platforms. At the client point, communication devices such as handheld computers and cell phones integrate all the information system capabilities including phone, camera, and computer into one device. At the server and network level, it is becoming a common practice to integrate the telecommunication and computing platforms into a single network; the internet (Stallings 50).
Grid Computing
It involves linking geographically distant computers into a single network to make a virtual mainframe by combining the processing power of all the systems on the grid (Laudon and Laudon 204). This approach ensures that the computing resources like the processors of the remote computers are utilized in case of idleness. Due to the high-speed Internet connections, firms can connect remote machines economically and move a large amount of data. Consequently, distributed grids can integrate computing resources of multiple organizations, also termed as multiple administrative domains. This can enhance commercial transactions, thus making it possible for a firm to venture into a global market. For instance, Globus Alliance and other providers provide grid computing solutions. The business implication of this strategy involves cost saving, speed of computing, and agility.
Utility Computing
Also known as on-demand computing, this technological solution allows firms to provide computing resources when there is demand for data processing operations. In this case, companies can reduce their investment in IT infrastructure by investing just enough to handle average processing needs and paying for as much additional computing power as the market demands. A firm dealing with computational services can be consulted to provide services for information system procurement and security, and a service desk for resolving issues with all the providers of the company’s IT service.
Companies like IBM have been able to embrace utility computing since it provides value to the firm and eases the business management processes (Shankland). This business computing model is further explained in the next section (Integrating hardware platform trends), as it is a more applicable model.
Autonomic Computing
This computing model encompasses a corporate effort to build systems that can configure themselves and even guard themselves against threats like intruders or viruses; this is because of the complexity of the computer systems hence difficult to manage. Autonomic computing frees system administrators from many system management and operational tasks so administrators can employ a lot of their IT skills in fulfilling the core business needs (Laudon & Laudon 207).
Edge Computing
This technology is in line with web-based applications, in that the most important contents, logic, and operations from the website are acted upon by smaller, less expensive servers located nearby the user. Like grid computing and on-demand computing, it uses the internet as a platform to balance the workload experienced by a company across many workstations remotely located on the network. This approach increases the flexibility of the firm’s operations, enhances service levels, lowers technological costs hence addressing the information technology investment challenge (Novell).
From the above alternatives, on-demand computing is preferred as the best alternative as it addresses the challenges faced by organizations about Information systems investment and management. Therefore, the next section examines on-demand computing in the context of its strategic implication for managerial and corporate goals.
Integrating Hardware Platform Trends
On-demand Computing
The utility computing model reduces the hardware and software expenses that a company may incur in its information systems maintenance and management (Laudon & Laudon 205). A firm can outsource the IT operations to another firm to concentrate on the core business plans and only request for computational operations when there is demand. The objective of on-demand computing is to enable an organization to address the business issues related to the costs of IT infrastructure. Therefore, the following points outline how on-demand computing would solve the challenges that a company faces and thus a strategic business implication for a sustainable mission:
- The information system challenge: By minimizing the IT operations to the general required tasks like data entry and routine maintenance, an organization can be able to obtain business value from the minimized IT management. On-demand computing may only be requested when there is a need for application development and maintenance.
- The strategic business challenge: through utility computing, a firm will be able to reinforce its assets for the core business operations, since the assets needed to use information technology will be handled by another firm, hence realization of the business values.
- The globalization challenge: utility computing will help executives to tackle the globalization challenge by shifting the firm’s infrastructure from a fixed capacity to a flexible infrastructure. This will enable the firm to launch an entirely new business process that fits the global economic challenge.
- The IT infrastructure challenge: this is the main challenge that faces most organizations. Through on-demand computing, companies can acquire hardware and software that are up to date through a firm that offers on-demand computing. This will enable such companies to develop IT infrastructure that can support their mission when there are changing business conditions.
- Responsibility and control challenge: Since a company offering on-demand computing will be much involved in IT operations, most managers will have to worry less about the use of the information systems. The small remaining infrastructure owned by the company would be properly managed by the system administrator (Shankland).
Implementation of on-demand computing
Therefore, for organizations to have full potential in the implementation of utility computing, they need to redesign their operations to benefit from such services. Companies need to make intensive changes in the IT infrastructure, design new business models, and eliminate out-modeled business processes and organizational structure.
In the context of IT infrastructure, organizations should rationalize their computational procedures by having standard policies that enable their employees to recognize the need for corporate responsibility that governs the use of information systems. Therefore, companies like IBM, Sun Microsystems, Microsoft, and HP can be consulted to offer on-demand computing (Schauland). These companies have departments that handle change management for application development and maintenance, and migration of applications from testing to production status. Such companies also provide security and a service desk for solving issues with all the providers of the firm’s IT services.
Conclusions
In general, most organizations have been operating on a fixed IT infrastructure that presents them with high costs of the information technology budget. In this paper, we have looked at the various challenges that most strategic management teams in organizations face in the process of IS acquisition and maintenance, and the trends in hardware platforms that can address those challenges.
The key management challenges in building and using information systems/technology include the information system investment challenge, the strategic business challenge, the globalization challenge, the IT infrastructure challenge, and the responsibility and control challenge.
The contemporary hardware and software platform trends that address the overwhelming need to reduce IT cost, incorporate information across platforms, and provide a higher level of proper managerial control and service include the combination of computing and telecommunications platforms, grid processing, edge computing, utility, and autonomic computing. In essence, on-demand computing is seen as the most appropriate for many small and large organizations since it addresses the business issues faced by such firms.
Recommendations
As per the conclusions, it is recommended that organizations should adopt an on-demand computing model for their business success. Since companies experience a lot of expenses in their IT infrastructure investment, it is appropriate for the strategic management to opt for a more flexible infrastructure that could enable the firm to launch a new business process that they would never attempt with fixed infrastructure. In addition, a redesign of the organizational process could enable the new business computing model to save a considerable percentage of the IT expenses that are incurred through the maintenance of hardware and software.
Works Cited
Haag, S., Cummings, M., and McCubbrey, D.J. Management Information Systems for the Information Age. 3rd Ed.New York: McGraw-Hill, 2002.
Laudon, K., and Laudon, P. Management information Systems: Managing the Digital Firm. 9th Ed. Upper Saddle River, NJ: Pearson Prentice Hall Inc, 2006.
Novell. Make the move from UNIX to Linux. Edge computing and Infrastructure services, 2009. Web.
Shankland, S. On-demand computing has arrived. CNET. IBM. 2003. Web.
Stair, R.M. and Reynolds, G.W. Fundamentals of information systems. 3rd Ed. Boston: Thompson Course Technology, 2006.
Stallings, W. Business Data Communications, 5th Ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2006.